Blocking of ITC under Rule 86A without recording 'reasons to believe' and objective evidence is legally unsustainable

Last updated: 30 May 2025

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The Patna High Court upheld the blocking of Input Tax Credit (ITC) for Graphic Trades Pvt. Ltd. under Rule 86A of the BGST Rules. This decision was made because evidence indicated the company had received ITC from a supplier found to be non-existent. The court noted that blocking ITC is an interim measure and the company can seek reconsideration.

Court :
Patna High Court

Brief :
The Hon'ble Patna High Court in Graphic Trades Pvt. Ltd. v. State of Bihar and Ors. [C.W.J.C. No. 4506 of 2025, dated April 23, 2025] disposed of the Writ Petition and upheld the blocking of ITC under Rule 86A of the Bihar Goods & Services Tax Rules, 2017("the BGST Rules"), as the authorities had sufficient material indicating the petitioner received ITC from a non-existent supplier. Further, the Court noted that such blocking is an interim measure and the petitioner may seek reconsideration under paragraph 3.4 of the applicable guidelines contained in CBEC Circular No. 20/16/05/2021 - GST/1552 dated November 02, 2021("the Guidelines").

Citation :
C.W.J.C. No. 4506 of 2025, dated April 23, 2025

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Attached File : 671907_5857_graphic_trades_private_limited.pdf

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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